Over two years ago I wrote a column scolding Ford Motor Co. for its decision then to close its metalcasting plants: it said they were not “core operations,” and my criticism was that Ford was being shortsighted.  

Last week Ford reported a third-quarter income of $427 million — a $332-million increase over 2008 3Q earnings — and soon a reader reminded me of the June 2007 column, and suggested Ford deserves credit from me now. The logic, apparently, is that Ford is making money, so everything must be right again. My correspondent wrote:

“Decisions at times can be difficult and enigmatic to some, but they are made … Isn't it great when they turn out to be correct. Ford deserves, at least, an ‘atta boy’ from the foundry world. Looks like they are going to be around to create demand for our industry to serve …”

He’s right: I couldn’t understand Ford’s decision in 2007. I’m very glad Ford is making money now and hope they will continue to do that, but the company’s earnings do not indicate much that is positive for metalcasters (as he suggested.) In fact, if Ford’s example were to be followed it would be bad for domestic metalcasters. Note that the foundry that earned Ford’s latest business is in Brazil: it named Tupy to cast the CGI blocks for its new V-8 diesel engines.

There are larger issues and trends at work here, and Ford is not to blame for those. U.S. manufacturing costs are too high compared to global standards. The effort to help U.S. manufacturers compete globally is impeded, not supported, by federal government interventions and takeovers.  Looming threats of stringent carbon taxes and higher labor costs (both resulting from more federal action) make the domestic market even less congenial to manufacturing.

Just before Ford reported its results, the Institute for Supply Management announced that October economic activity in the manufacturing sector expanded for the third consecutive month, and that the overall economy grew for the sixth consecutive month. Tim Hanley, Deloitte’s vice chairman and U.S. Process and Industrial Products industry leader, called that “an encouraging sign for manufacturers and the U.S. economy as a whole. The growth in the report this month mirrors the picture we are seeing with other manufacturing related economic indicators.”

But, Hanley added that “there are still significant questions and concerns regarding unemployment numbers, the rising dollar, and lagging consumer confidence. Overall this index report is a positive indicator of further economic growth, but it’s still too early and there too many unknowns remain to determine if this uptick will be sustained.”

Ford is making money in spite all of this, for which they deserve credit, but if we draw any conclusions from that we may not be so encouraged.